__economic thinking about sports__

Big Ten Expansion Timetable Speeds Up

2010 April 19

by Brad Humphreys

So much for the leisurely 18 month period for exploring their options. Recent reports indicate that the Big Ten expansion timetable has gone into overdrive. The current plan for expansion involves a 14 team or 16 team “Super Big Ten” which would require adding three or five additional institutions. A number of the potential targets are in the Big East Conference, which added a “loyalty clause” to the conference agreement following the raid by the ACC that stripped Boston College, the University of Miami, and Virginia Tech from the Big East several years ago. A CBS blogger ranks the potential expansion targets, including Big East members Connecticut, Rutgers, Syracuse and Pitt. The “loyalty clause” requires 27 months notice from a departing school, and a relatively paltry $5 million buyout.

The timetable was apparently moved up when someone in the Big 10 office added 27 months to today’s date and realized it was a long time in the future, especially when they were going to “explore” expansion for 12-18 months. Expansion candidate #1 was, and remains, Notre Dame. The report in the Chicago Tribune linked above claims that Notre Dame could increase TV revenues from $15 million per year from its current deal with NBC to $22 million per year from an expanded Big Ten. Despite the revenue increase, compensation for student athletes will remain fixed at the value of a scholarship, room and board.

Eh, I understand you think the players should be paid, but let’s not misuse the word “fixed,” because very few things have increased as fast over the last ten years as the cost of attending a major college or university.

I’m not misusing the word “fixed.” In a typical industry, when revenues increased, the marginal revenue product of inputs would increase, and payments to owners of those inputs would increase. That’s not the case here.

I am interested in hearing more about your evidence that the rate of increase of tuition and fees at universities exceeded the rate of increase of revenues earned by NCAA football and men’s college basketball over the last 10 years.